Former Anchorage Mayor Dan Sullivan withdrew his name from the US Senate race today by issuing the following statement:
“I was asked just one day before the filing deadline, by conservative leaders that I know and respect, to consider running in the Republican primary for U.S. Senate. I filed the following day to keep that option open as I vetted whether or not that would be the best path forward for my family and for Alaska.
“Over the past two weeks, I have had the opportunity to talk to hundreds of people both statewide and nationally about a potential campaign. It is clear that there is significant financial support available from individuals and organizations for conservative candidates like myself. Additionally, polling data shows that this primary could be extremely competitive.
“However, after evaluating that information and discussing options with friends and family, I have decided to withdraw from the August primary election. I believe I can best serve Alaska by staying in Alaska and working on local and statewide issues. Our recent success with the “Save the Tax Cap” initiative (Prop. 8) is an example of the type of issue on which I will continue to lead.
“I know this announcement will be disappointing to those who encouraged me to run and to those who expressed support after I filed. I can assure them that today’s announcement does not preclude my continued involvement in public affairs or from seeking another elected office in the future if I feel I can truly make a difference.
“Lynnette and I love Alaska and the amazing lifestyle and opportunity it provides us. We are truly blessed.”
NO WORD ON GOVERNOR’S RACE
Sullivan filed for US Senate on June 1 to challenge Lisa Murkowski, Alaska’s senior senator. His name has been mentioned in political circles as a strong possibility for governor, a race that will start in 2017 and could be a three-way contest with sitting Gov. Bill Walker, who is not affiliated with a party, and a Democrat such as Mark Begich.
When asked about his interest in the governor’s race, Sullivan said it was far too early to consider it.
There was a time when your word was your bond in Alaska. Not long after that, you could scribble out an IOU on a bar napkin, and take that to the bank. Those were the days.
Those days might be over, but not for lack of trying by an idealistic journalist with ink in his veins and too much trust in his heart.
That would be the co-founder of the Alaska Dispatch, one Anton Hopfinger, who finds himself locked in an epic legal battle with the woman who took over his enterprise, one Alice Rogoff.
Yes, that Alice Rogoff, married to one of the richest men in the world. The woman who is advising the governor on the restructuring of the Permanent Fund into a Sovereign Wealth Fund, whatever that is. The woman who opened up a Native Arts gallery in downtown Anchorage, got hundreds of thousands of dollars in state grants, and then went out of business. The one who had the president over for dinner last year.
Hopfinger filed a complaint this week in Anchorage Superior Court, stating that Rogoff still owes him the better part of a $1 million for his 5 percent share of the Alaska Dispatch. The proof of the deal? In addition to witnesses present, there is Exhibit A, the bar napkin:
The bar napkin that Alice Rogoff signed two years ago. Tony Hopfinger had the sense to preserve it.
THE START UP
Hopfinger, who left the old Anchorage Daily News to start the online-only Alaska Dispatch with Amanda Coyne, details the history of his deteriorating relationship with Rogoff in the 18-page complaint, which lays out everything from the 2013 purchase of the Anchorage Daily News to a December argument between Hopfinger and Rogoff in the parking lot of the Alaska Railroad.
It’s all there, a textbook case of how Dad was right when he said “Get it in writing.”
Like so many partnerships, it started off rocking and rolling. In 2008, Hopfinger and Coyne were running one of the hottest, scrappiest journalistic properties in the nation, but they were vastly under-capitalized and overworked.
When Rogoff caught wind of the startup operation the next year, she offered to come aboard, essentially as an angel investor. Her timing was good; the deal was struck. Alice would own 90 percent of the operation, and Hopfinger and Coyne would split the remaining 10 percent.
Come 2012, Coyne was out – starting her own blog — and Hopfinger stayed on as editor, growing the property and hiring away all of the top talent from the Anchorage Daily News. He had a separate employment contract, which is Exhibit B in the complaint.
Then Rogoff had the idea of buying the Daily News and consolidating operations. After all, Rogoff discovered, there was value to having a printing press.
By 2013 Rogoff and Hopfinger were in discussion with McClatchy Co. But Hopfinger had his doubts: The dead-tree industry of newspapers was failing. Was it really a smart thing to do?
Rogoff was undeterred. She told Hopfinger that she might bring in other investors, naming Jon Rubini, the CEO and chairman of JL Properties, largest real estate firm in Alaska. That rubbed Hopfinger, still a journalist to his marrow, the wrong way, and the two began making plans for Hopfinger to start unwinding from the entire enterprise. But he’d stay on and help with the merger, the editing, the publishing – all the actual running of the newspaper.
According to the complaint, Hopfinger didn’t know that Rogoff had already formed up a new side company, AK Publishing LLC, which would be a holding company for her growing news empire. No one else knew either, evidently, and it did not come up in a lavish profile written about this maverick Washington socialite who had taken Alaska by storm.
As it became clear that Hopfinger would need to be bought out, he asked for $1.3 million, but accepted Rogoff’s $1 million offer, payable over 10 years, plus $300,000 in ownership of the new company.
By March, 2014, the deal was done. The Daily News covered it this way. From what ex-staffers tell us, it was a pretty rocky merger.
But after that, Hopfinger maintains, Rogoff started in with the delays and excuses. She couldn’t put things in writing just yet, because the bank needed to be kept out of the loop. Maybe Hopfinger began to sense that he was being gamed, so he pressed for an agreement, which came on a bar napkin: “I agree to pay Tony $100K at the end of each calendar year (beginning ’14) for 10 years.”
That’s a pretty loose deal for million-dollar promises and doesn’t come close to capturing the interest owed on what is essentially a 10-year loan. But Hopfinger, Rogoff, and her attorneys were all present when she turned over the napkin to him.
“Show this to the judge if I don’t ever pay you,” she said at the time, according to Hopfinger.
DEVIL IN THE DETAILS
Hopfinger stayed on, managing the merger of the Dispatch with the Daily News. They had to move offices, as the building had been sold to GCI. They needed new printing presses. There was the question of merging the two websites, staffs, and sales territories.
Rogoff made the first $100,000 payment to Hopfinger on Jan. 1, 2015, and that year she worked through her loan issues with Northrim Bank and communicated to Hopfinger that she was ready to sign off more formally on their contract, which she was not able to do earlier without spooking the bank.
But she never made any more payments, according to the complaint. In December, the two argued in the parking lot of the Alaska Railroad Building, and soon thereafter Hopfinger went on a pre-approved honeymoon. After he returned, his job at the new Dispatch enterprise was somehow terminated.
So now we come to the counts of the complaint: The promises made. The promises broken. The verbal agreements. The bar napkins. The employment severance.
It’s all over but the shouting.
The shouting, yes, but also the attorney fees and the lost opportunity, the stress, and the uncertainty. Rogoff, with her endless spigot of funds from her billionaire husband, David Rubenstein, could very well starve Tony Hopfinger for the rest of his life through the legal maneuvers that unbalance the scales of our court system.
Of course, Rogoff has another lawsuit going, which has her vs. McClatchy, a company that she claims pulled the wool over her eyes during her purchase of the Daily News, saying that McClatchy “failed to perform many of (its) obligations, which was a breach of the SPA (Stock Purchase Agreement) and a violation of the implied-in-law covenant of good faith and fair dealing, which is implied in all contracts.” (Update: Case was dismissed at request of plaintiff Rogoff on June 1).
Alice Rogoff has all-but disappeared from the public eye since hosting her presidential dinner last summer here in Anchorage, where she served caribou she’d shot. She did throw an engagement party for her PT Capital partner earlier this month, and 100 attended.
But if she seems to have a furrowed brow, it might be due to the troubles: a financially failing newspaper, a tanking readership, and her good will having all but dried up with her potential advertisers as the state sinks into recession. Becoming the “governor whisperer” to Bill Walker, whom she helped create, has not brought profit.
Her ace may be David Rubenstein — philanthropist, millionaire billionaire husband, financier — who may come riding to her rescue with a satchel of cash and a gaggle of lawyers, because settling with Tony Hopfinger is going to be a lot cheaper than letting this case go to trial.
A page-turner found at Costco: “A groundbreaking World War II narrative wrapped in a riveting detective story,” The Devil’s Diary, Alfred Rosenberg and the Stolen Secrets of the Third Reich, delves into a diary of a member of Hitler’s inner circle.
The diary itself was found hidden in a Bavarian castle at the end of World War II. Its nearly 500 pages reveal the seeds of the Nazi philosophy that led to the Holocaust. Alfred Rosenberg himself was tried and convicted of war crimes at Nuremberg and was executed. That’s when the diary disappeared and did not reappear for 50 years.
Author Robert K. Wittman was an FBI agent when the chief archivist at the U.S. Holocaust Museum contacted the agency to report the diary was being offered by a private collector for a million dollars. The Devil’s Diary reads like a detective novel, full of twists and turns, eccentric characters and unlikely discoveries.
(The original review in the June 13 Must Read Alaska newsletter contained review material from HarperCollins, not intended to represent itself as original work -SD.)
Commissioner of Revenue Hoffbeck makes a point to the House Finance Committee on June 14, 2016.
In the middle of House Finance hearings on a bright Tuesday morning in Juneau, State of Alaska Revenue Commissioner Randall Hoffbeck broke the news. To those in the room, it sounded as if he had just received word of it: Fitch Ratings downgraded $1.1 billion of State of Alaska general obligation bonds to AA+, and lowered the state’s credit outlook to negative.
Fitch was going to do this at some point, as it had announced earlier this year. After all, oil prices can be a tyrant to a commodity-based economy such as Alaska’s. But the company waited until June 14 when the commissioner of Revenue was testifying to a clearly doubt-laden House Finance Committee. Why?
Was a request made by the Walker Administration this week to have the report issued during the hearing, rather than on any of the other 364 days in the year?
After all, Fitch contracts with the State of Alaska to provide the rating; it is a client-contractor relationship worth about $16,000. If the Governor of Alaska made such a request, or if any in his administration did, it is the equivalent of using the bond ratings themselves to bully legislators into doing his will. It would be a form of manipulating the markets.
The history of Alaska’s slipping ratings goes back to the end of 2014, just about the time Gov. Walker was sworn into office. Standard & Poor warned Alaska, and then finally lowered its rating on Jan. 5, 2016. Moody’s followed in February.
But Fitch? Even though it cautioned it wasn’t far behind the two other agencies in downgrading Alaska, it waited until June 14, smack dab in the middle of a House Finance hearing.
The question that is being asked in lowered tones around the capital city is whether the governor of Alaska instructed his debt manager, Deven Mitchell, to request the report from Fitch, essentially timing the release. In fact, Mitchell is on record saying he requested the report for the Revenue Department; we just don’t know when.
TIMING IS EVERYTHING
Governor Walker expressed no surprise, for he knew this was coming: “This further underscores the need to pass a sustainable fiscal package this year. We have all the tools to solve the problem,” he said in a quickly cobbled statement. “I urge members of the House to create certainty and stability for all Alaskans by voting for the Permanent Fund Protection Act, which is the cornerstone of the plan for a sustainable future.”
The committee asked Hoffbeck, but he could not say what the impact of a credit downgrading was on the state or municipalities that borrow through bonds. There are too many factors; it’s far too complicated; it all depends.
Marcy Block, the director at Fitch who is responsible for the report, is on record saying the agency could change its rating again if the Legislature passes substantive legislation. She is not on record saying “if the governor makes budget cuts.”
It’s almost as if it was orchestrated to push the governor’s legislation. If so, Walker’s actions would be a betrayal of the public trust.
Governor Walker can’t paddle fast enough to get away from the mess he created with the budget.
GOVERNOR WALKER CAN PADDLE, BUT CAN HE CUT?
The sticking point: Democrats and the Governor-They-Created have been unwilling to cut the budget this year. Republicans are getting the blame. Same as last year.
This forced a decision for Republicans..same as last year: Either allow the governor to shut down government, or pass a spending plan that is clearly too big to support without additional revenues.
Those additional revenues this year could come in part from SB 128, creating an endowment fund out of the Permanent Fund and all the other pots of money the state has sitting in accounts hither and thither; accounts that are not being invested for their highest yield. Managing it all as an endowment would spin off more revenues for State workers, but fewer dividends for the rest of us.
SB 128, while controversial because it lops $1,000 off of the 2017 Permanent Fund dividend of every citizen, passed the Senate — and will end up as road kill in the House.
It was the only solution the Senate could see working, since Democrats continue year after year to hold the budget hostage due to the two-thirds three-quarters majority needed to tap into a reserve fund that would be used, once again, to pay for the part that oil revenues can’t cover.
And SB 128 is a reasonable solution, we argued last week, considering the choices.
But when it hits the House floor for a vote, representatives will probably say, “Hell, no.” And they’re also justified.
No worries. Governor Walker can, if he is serious, cut the out-of-control spending all by himself. He needs no further authority, as he alone has the veto pen. If this former Republican does make substantial cuts, the House might be inclined to help him out with a longer-term funding mechanism.
And if the governor is really serious, he could simply run a red line through the funding of next year’s Permanent Fund payout. Cut it in half yourself, Bill Walker: That would send a message.
Yes, the governor can actually do that. He grabbed the authority to expand Medicaid, costing the state hundreds of millions of dollars, so why doesn’t he just use his red pen on the Permanent Fund payout?
He won’t, because he’s playing games to try to dislodge the Bipartisan Majority and run the tables with his Democrats.
NO FISCAL PLAN
The budget is done, but is unsigned. Walker should have sent pink slips out two weeks ago when the calendar turned to June.
This year, unlike last year, the Democrats and state employee union leaders like Vince Beltrami are not in histrionics about the pink slips or the ticking clock. They are quiet as a mouse because they have the playbook from the governor. They understand the field — run the plays just like last year.
This scenario is a repeat of 2015, when Walker not only refused to cut, he used his leverage as governor to help Democrats force tens of millions back into the budget, and he brokered a deal to secure automatic step pay increases for state employees.
This year Walker proposed a budget increase while also fighting for merit pay increases for state employees. He has been Big Government’s best friend, refusing to honor his campaign promise to cut government spending. In fact, he has done the opposite.
Oversized government like Alaska’s has an insatiable appetite for more money and more taxes. That’s where we’re at, and that’s why the Legislature is being forced to deal with his list of demands in special session.
GOVERNOR, SHOW US THE 16 PERCENT
Our prediction is that the House will not pass the restructuring of the Permanent Fund until the governor honors his promise to cut 16 percent of the budget.
We can’t blame them for holding firm, just as we understand that, from the Senate’s perspective, SB 128 was a workable compromise.
How they view the governor’s mess is the difference between the House and Senate; the two-year election cycle is built into the House for exactly a time such as this.
So get out your red pen, Governor Walker. Or else get out your black pen and sign the pink slips.
Former Anchorage Mayor Dan Sullivan might be thinking at this moment: “Which Door to Destiny do I walk through?”
Dan Sullivan, former mayor of Anchorage.
On June 1, the popular mayor filed for U.S. Senate to take on our sitting Sen. Lisa Murkowski. Since then, he has been encouraged by polling numbers showing he is clearly within striking distance for the Aug. 16 primary. There’s the “money hill” to climb, but it is not as insurmountable as one might think. Word is, promises have been made.
And yet, the Alaska’s governor’s race heats up next summer — not much more than a year from now. Republicans need a candidate they can count on. And the state clearly needs a leader who can be an alternative to Indie-Democrat Gov. Bill Walker and presumed Democratic runner Mark Begich. He’s been approached by Alaskans who want to explore that route.
Mayor Dan once inherited a city budget that had been picked to the bone by Begich, his predecessor. It was $17 million in the red when Dan took over on July 1, 2009 and said he would have to put the city on a strict fiscal diet. He did.
When he left office six years later, he had cut $100 million in spending and bequeathed a surplus. His parting words for the next mayor were: “Don’t screw it up.”
Ethan Berkowitz did not listen. He’s adding and padding at a time when homeowners can least afford to pay for excesses of his too-big-to-fail doctrine.
Mayor Berkowitz and Union Bossman Vince Beltrami
Gov. Bill Walker inherited a falling-knife economy and said he’d cut the budget by 16 percent.
Bill Walker did not cut 16 percent, as we know. Instead, he plotted and planned with Democrats and turned to the revenue side of the equation. His Democrat supporters want more taxes on everything. The ones who brought him to the dance do not want to cut state spending.
Mayor Dan, unlike Berkowitz, Begich and Walker, has a record of cutting wasteful spending. He has admirers and supporters for how he made Anchorage whole again through tough cuts and plain-spoken explanations. He’d make a heck of a governor.
Dan Sullivan has been quiet since announcing his run. The thinking from observers is he has been doing his homework. By now, he’s pulled together all the data points he needs to choose his path forward.
With just two weeks left in the FEC’s reporting calendar, it’s probably decision week.
There – we acknowledged the grenade on the table. Now, to explain:
In the best of all possible worlds, Alaska is going to lose 10,000 to 15,000 jobs over the next 24 months, according to credible analysts. Some say that could go as high as 30,000. The Chicken Littles are saying 40,000.
Housing values in the Railbelt are collapsing already, starting at the top of the market, but the domino effect is well underway; houses in the $300,000 range now sit vacant, dandelions and grass grow tall in the yards as the moving season hits midterm, and prices have started their march downward toward October, when the chill will hit.
Buyers are holding off. Everyone knows this is a time of great uncertainty in Southcentral Alaska. Why jump in the water now?
Freight carriers have a unique perspective: Some are reporting that their southbound barges are filled with containers of household goods – the most they can remember. Northbound barges are two-thirds full, a departure from just three years ago when the barges were packed with sundry and building materials.
Unlike 1986, Alaska is not riding a wave of national economic failure. The nation’s economy is a walk in the park compared to what we’re facing in our state. Today, we are riding the collapse of the price of oil, Alaska’s economic bread and butter. With a decrease in oil prices comes a loss of 25 percent of our gross state product.
Lawmakers are stuck with a budget they can’t trim because there are just enough recalcitrant members who believe every item and service is essential, and we have a governor who must dance with the big spending Democrats who brought him to the party.
The Democratic refusniks demanded a ransom, and the bipartisan majority had to give in for the second year in a row because there are just not enough conservatives to hold fast against the spendthrifts. The budget, also imperfect as it is, sits squarely on the desk of the governor, gathering dust by the week, and only he can cut it further. No one expects he has such courage.
Watching our state’s every move are Moody’s and Standard and Poor, and they have their fingers on the trigger when it comes to our bond rating. Once that goes, no small business owner in the state will be able to get a decent loan to build a warehouse or fund a capital improvement, because the banks will know the spiral is out of their control. Lenders will be much more risk averse when it comes to home loans.
The problem is an Alaska-sized dilemma because, while we are fiddling, we have various savings in and around the Permanent Fund that could be used to give our state a chance at survival. Earnings Reserve. Constitutional Budget Reserve. We just don’t manage our whole portfolio very well and it doesn’t work as hard for Alaska’s budget as well as it could.
PART OF THE SOLUTION
Senate Bill 128 is not perfect. Some Alaskans don’t like it because cuts to government were not deep enough. They’re right – the cuts were not what we expected.
Others don’t like it because we’re still giving tax credits to oil companies. They’re right – we are still giving a few credits, and let’s hope the drillers and explorers don’t all leave at once now that we’ve reduced the incentives.
A few are saying that Alaskans shouldn’t have to give up $1,000 of their current $2,000 Permanent Fund dividend because it’s too much to ask of the average person.
That may be true, and yet so is this: The $1,000 we give up from our dividend is chump change compared to what we’re about to lose in the equity of our homes and businesses.
It’s heresy to say it, but the Permanent Fund dividend has made welfare cripples out of the most staunch libertarians we know — otherwise thoughtful patriots who now demand they get their checks for work they didn’t actually perform. And yes, to be clear, we agree with them that the state budget needs to come down more.
The Legislature, however, has already submitted its budget to the governor and there is no going back. Small government Republicans and their bipartisan majority were able to cut $1.2 billion over the last two years, and that was all they could get through.
Cut more? Yes, legislators need to cut more next year and we voters need to give them a solid conservative majority this fall that will allow those tough decisions. This election cycle is everything to our future.
Now, the funding mechanism must be put in place – SB 128 takes care of most of the problem, without implementing an income tax. Most conservatives can live with that. What we can’t live with is a haircut on our Permanent Fund dividends, plus a host of new taxes that would cost us thousands more of income we actually did earn.
THE GRENADE AWAITS
The clock has essentially run out. Either we put the Permanent Fund into play to spin off earnings for state government now, or we lose the option entirely. Even if SB 128 isn’t a permanent fix, it would keep our ship from hitting Bligh Reef for maybe five or six more years, while government adjusts to the new reality, and maybe by 2018 we can get a grownup back in the Governor’s Office to help.
What happens next in the private sector economy? People who own homes and have jobs are about to get hit hard as the private sector collapses in this recession already underway. In the end, many will leave the state as they did in the late ’80s, and they’ll not have a Permanent Fund check to complain about. Those who stay will rebuild the economy piece by piece, hopefully wiser than before.
The grenade is on the table. It was placed there largely by Democrats who refuse to bring down the size and scope of government, who held the budget hostage. It was placed there by a governor who has no political will to face down his Democratic dance partners. But it’s there nonetheless, and we have to deal with it.
Will the House of Representatives members have the courage to make SB 128 work for Alaska?
Or will they pull the pin out of the grenade on the Alaska economy by saying no?
Did candidate Steve Lindbeck receive his Screen Actors Guild card? What with all the theater he’s engaged in lately, he should go all-in on union membership. Acting, after all, is dangerous business.
Last week, Lindbeck wrote to the Alaska Dispatch, saying that when he’s congressman he’ll get to work right away to make sure that affordable daycare is available to all who need it.
This week he promised on social media platforms that he’d make sure the correct maritime company would win private sector contracts.
Lindbeck, who was with the Anchorage Daily News for many years as an editorial writer and editor, followed up by staging a parking lot production in front of Congressman Don Young’s official office today.
He brought along a trio of walk-ons, set up a lectern, chased some paper around the parking lot, but then had not a whiff of preparation for the questions from the two-and-a-half reporters who showed up.
For a man who has been in the news media most of his career, and with all his news friends to pull favors from, it was a stunning failure.
Lindbeck’s baptism into grievance politics is this: He demands that Don Young intervene in a contract that has not yet been awarded but that is being negotiated this summer.
The contract in question starts with Alyeska Pipeline Service Company, and its current contractor, Crowley Maritime, whose headquarters is in Jacksonville, Fla.
Crowley decided not to bid on the next contract to escort ships in and out of Prince William Sound, and Alyeska is negotiating with Edison Chouest. This is the free market system.
Standing at the lectern and wearing a cloak of disappointment that the media didn’t bite, Lindbeck said he believes that Young should intervene and ensure that Crowley, a union shop, gets the contract — the one it has declined to bid on.
Lindbeck said that since Edison Chouest is non-union, it is not a good company and should not get work in Alaska. It is from Louisiana, and that’s another strike against it.
He further alleged that since Edison Chouest was responsible for the wreck of the Kulluk, Shell’s drilling rig, it is unsafe in Prince William Sound. And since Prince William Sound has fish, and fish are a resource, the public — him, in particular — should have final say about which companies get to operate there.
The candidate ignored that in 2011, a Crowley Maritime barge carrying 146,000 gallons of fuel got loose from a tugboat along Alaska’s western coast and nearly caused a massive disaster. These things happen from time to time, but Lindbeck wants to pick and choose his disasters, his shipwrecks, and his favored contracts.
Lindbeck then went straight to the heart of his complaint: Donations.
“Don Young is refusing to do anything while his top donor plans to fire Alaska oil-spill prevention workers… Protecting a Louisiana company that has given you nearly $300,000 …We must oppose the outsourcing of Alaska jobs that harms our economy and endangers Prince William Sound…”
Lindbeck needs to do his homework: Dollar for dollar, his good friend, the former Senator Mark Begich, received just as much in donations from Edison Chouest as Don Young did year over year, for the six years that Begich served in the Senate.
Lindbeck also played dumb when it came to the fact that Crowley also gave to Young and Begich alike. He didn’t seem to know about that.
This is troubling truth-twisting coming from a man who spent his career in journalism. That he is lying so early in his political career is a clue as to what the Lindbeck Summer Stock theater season will be like.
We’re awarding Steve Lindbeck his SAG card tonight. But he’s going to need a few more dress rehearsals to be convincing. Right now, he’s strictly at the level of an “extra.”
